+3. Guidelines
---+Status of these Joint Guidelines
------+10. This document contains Joint Guidelines issued pursuant to Articles 16 and 56 of Regulation …
------+11. Joint Guidelines set out the ESAs’ view of appropriate supervisory practices within the …
---+Reporting Requirements
------+12. In accordance with Article 16(3) of the ESAs’ Regulations, competent authorities must notify …
------+13. Notifications will be published on the ESAs’ websites.
---+Title I - Subject matter, scope and definitions
------+14. These Joint Guidelines aim to clarify how competent authorities should consistently integrate …
------+15. These Joint Guidelines are addressed to competent authorities.
------+16. Competent authorities should apply these Joint Guidelines when performing supervisory stress …
------+17. Unless otherwise specified, the terms used in these Joint Guidelines have the same meaning as …
------+18. In addition, for the purposes of these Joint Guidelines, the following definitions apply: 5 i. …
---+Title II- Requirements regarding consistency, long-term considerations and common standards for assessment methodologies in stress testing of ESG risks
---+Objectives
------+19. Pursuant to the sectoral legislation, competent authorities should implement these Joint …
------+20. Competent authorities should consider all ESG risks and their potential evolution when …
------+21. Competent authorities should adopt a risk-based approach, starting with a materiality …
------+22. As part of the materiality assessment, competent authorities should identify which ESG risks …
------+23. Competent authorities should consider using clear qualitative and/or quantitative criteria …
------+24. Competent authorities are encouraged to continue their efforts and research to gradually extend …
------+25. This gradual roll-out should be accompanied by continuous methodological refinement, capacity …
------+26. Competent authorities should aim to fully integrate ESG factors into overall stress testing …
------+27. Competent authorities should review and reconsider as appropriate the types of ESG risks …
------+28. Although these Joint Guidelines do not cover system-wide financial sector stress testing …
------+29. Competent authorities should ensure, to the extent possible, that ESG stress tests account for …
---+Principles and methodological considerations
------+30. When determining the principles and methodological considerations, competent authorities should …
------+31. Competent authorities should clearly define the coverage in terms of portfolios, sectors …
------+32. For cross-border financial groups, competent authorities should ensure that all relevant …
------+33. Based on the objective and the time horizon involved, competent authorities should ensure that …
------+34. The choice of the time horizon should be aligned with the intended objective of the exercise: ▪ …
------+35. Competent authorities should identify and select stress test scenarios based on the objectives …
------+36. Wherever possible, competent authorities should consider the integration of compound risks …
------+37. With the aim of integrating material ESG risks into short-term stress testing exercises …
------+38. When performing longer-term ESG stress testing, competent authorities should consider several …
------+39. Depending on the sophistication of the approach, scenarios may take the form of simple …
------+40. Competent authorities may decide to apply the same scenarios to all financial entities for …
------+41. Competent authorities should assess the merits of a top-down versus bottom-up approach …
------+42. When using a bottom-up approach, competent authorities should establish clear methodological …
------+43. A hybrid approach could be considered, leveraging the strengths of both methodologies. …
------+44. In deciding on the level of granularity, competent authorities should strike an appropriate …
------+45. At a minimum, competent authorities should consider the following granularity dimensions: a. …
------+46. Competent authorities should decide on the appropriate level of data granularity depending on …
------+47. For the analysis of funds, competent authorities may consider, when possible and consistent …
------+48. For ESG stress tests, competent authorities should start by using a static balance sheet …
------+49. For exercises with medium to long term time horizons, a dynamic balance sheet (with or without …
------+50. Given the uncertainties surrounding transition pathways, policy developments, and market …
------+51. Any management actions recognised by financial entities should be assessed based on their …
------+52. Competent authorities should define the appropriate sample of financial entities to participate …
------+53. Competent authorities should also consider conducting targeted exercises on specific subsets of …
------+54. Competent authorities should apply proportionality principles, allowing for methodological …
------+55. Given the early-stage of development of ESG stress test modelling and data availability …
------+56. Competent authorities should recognise that all models have inherent limitations, and this …
---+Organisational and governance arrangements
------+57. Competent authorities should ensure that sufficient and adequate human and material resources …
------+58. Competent authorities should have data management and collection capabilities that support …
------+59. Competent authorities should set appropriate timelines for conducting ESG stress tests and …
------+60. The process should be structured to facilitate efficient analysis, consistent communication of …
------+61. For top-down exercises, competent authorities should rely, as much as possible, on regulatory …
------+62. Where data gaps exist, competent authorities should promote the use of reasonable proxies …
------+63. A rigorous quality assurance process should be implemented to verify the accuracy, consistency …
------+64. Competent authorities should maintain effective and structured dialogue with financial entities …
------+65. Where relevant and possible, competent authorities should coordinate across jurisdictions to …
------+66. When relevant, system-wide coordination should also be pursued to ensure that ESG stress tests …
------+67. ESG stress test results should be, to the extent possible, integrated into the broader …
------+68. The results should also guide supervisory follow-up measures and policy recommendations where …
------+69. Publication of results should be in line with relevant sectoral regulation and supervisory …
------+70. Given the evolving nature of ESG risks and stress testing methodologies, competent authorities …
---+Title III- Implementation
------+71. These Joint Guidelines apply from 1 January 2027 15
|
3. Guidelines
3. Guidelines
1. Overview
1.1 References
1.2 Identified Requirements
1.3 Related Standards
2. Identified Requirements
Requirements
| Source |
Requirement |
3. Related Standards
Standards
| Source |
Requirement |
- EBA - Published by the European Banking Authority at https://www.eba.europa.eu/
|